Australia aims to sell nuclear fuel to UAE

Australia to start negotiations to sell uranium to the UAE.

Energy Resource's Ranger uranium mine in the Northern Territory, Australia. The country is the third-largest producer of uranium ore.

Australia, which holds 40 per cent of the world's known uranium reserves, expects soon to start negotiations to sell radioactive ore to the UAE to provide fuel for the nuclear power programme.

The Australian foreign minister, Kevin Rudd, announced while visiting Abu Dhabi yesterday that the country intended to work towards a bilateral uranium trade agreement with the Emirates.

Such an agreement would open channels for the UAE to purchase and import fuel for its first nuclear reactors, which are slated to be in service by 2017. The US$20 billion (Dh73.45bn) nuclear power project, headed by the government-owned Emirates Nuclear Energy Corporation (Enec), would be the Arab world's first civilian atomic energy development. The programme has been hailed as a model of transparency and engagement with international efforts to limit nuclear arms proliferation and promote nuclear safety and security.

"Australia welcomes the UAE's efforts to establish a responsible approach to nuclear power generation and hopes that it will serve as a model for other countries in the Middle East," Mr Rudd said.

Talks between the two countries will focus on nuclear safeguards and details of the proposed use of nuclear fuel in the UAE programme, which aims to broaden the Gulf oil exporter's sources of energy for domestic consumption while reducing carbon emissions from its power sector.

"A bilateral safeguards agreement with Australia is a further strict non-proliferation condition that Australia requires for supplying uranium," Mr Rudd said.

The UAE, which hosts the Middle East headquarters of the Australian military, is a signatory to the UN Nuclear Non-Proliferation Treaty and has also signed the "additional protocol" of the International Atomic Energy Agency (IAEA) on nuclear safeguards. The UAE has held a seat on the IAEA's board since last year, reflecting the country's commitment to being a role model for other developing nations seeking nuclear power.

Australia, which has 22 nuclear safeguards agreements with 39 nations and the island of Taiwan, is the third-largest producer of uranium ore, behind Kazakhstan and Canada. One of its largest uranium customers is China, which is expected to build 110 of the 150 new reactors planned worldwide by 2030.

Mr Rudd's statement yesterday did not make clear whether Australia would propose to process its ore into nuclear fuel for the Emirates, or whether that would be done by a third country. The UAE has agreed to import "low enriched" uranium fuel from other qualified nations instead of processing ore itself. It has also agreed not to reprocess spent nuclear fuel.

The UAE has signed bilateral agreements on peaceful nuclear co-operation with a number of countries including the US, UK, France, Japan and South Korea.

At Braka, on a remote stretch of the Gulf coast in the far west of Abu Dhabi, Enec is preparing a site for the UAE's first four nuclear reactors, to be built by a South Korean development consortium. Construction of the reactors awaits approval by the Emirates' Federal Authority for Nuclear Regulation, an independent body recently established in the UAE. Although approval is widely expected, it is not a foregone conclusion and could be subject to stringent conditions.

"The UAE is setting up as rigorous a regulatory authority as exists anywhere," Lady Barbara Judge, a member of the UK Nuclear Development Forum and an adviser to the UAE energy programme, said on Monday while visiting Abu Dhabi.

Australia, which conducted more than $4.2bn of bilateral trade with the UAE in the past two years, is seeking to expand its uranium exports. In another controversial development, its ruling Labor Party has suggested scrapping an existing ban on exports to countries that have not signed the non-proliferation treaty, allowing India to become a customer.

"If we were to go down the track of opening up sales of uranium to India, there would be an even tougher process of negotiations" on nuclear safeguards, Martin Ferguson, the Australian resources minister, told Reuters yesterday.

Uranium prices have recently surged on the back of increasing Chinese demand and renewed interest from investors and hedge funds.

Australia produced nearly 8 million tonnes of uranium in 2009, 16 per cent of global supplies, according to the latest figures available from the World Nuclear Association. The country's output nevertheless declined by 6 per cent from the previous year, while worldwide uranium output rose 15 per cent.